LOCKDOWN LEVEL 2 Ver1 [ DAY 11]  

TOTAL DAYS 441 – 7 HOURS 30 MINUTES

Vaccine rollout day 125 / J & J VACCINE DAY 120 [Phase 2]

Milestone – 1,525,271.00  million vaccines administered

*New cases 9000

By the close of trade on Thursday 10 June 2021, the South African rand strengthened against the US dollar.  Over 11-13 June, G7 leaders are meeting in Cornwall, UK. This gathering highlights renewed G7 vigor and clout, with a UK presidency committed to action, the first public international outing for multilateralist President Joe Biden and increasing US and European concerns about Chinese and Russian behavior. Meanwhile, one hears little about the G20. It wasn’t supposed to be this way. Amid the 2008 financial crisis, G7 leaders and finance ministers realised they no longer had the heft to manage the world economy alone.

  • South African President, Cyril Ramaphosa lifted some of the restrictions imposed on companies with respect to generating their own power. He announced that the license-free threshold for companies who wanted to generate their own power would be upped to 100MW, from the current 1MW.
  • In the US, consumer price index (CPI) rose in May, leading to the biggest annual increase in nearly 13 years as a reopening economy boosted demand for travel-related services. Meanwhile, the number of people filing new claims for unemployment benefits fell for the week ended 4 June to the lowest level in nearly 15 months.   U.S. consumer prices are likely to peak this summer and then begin to dissipate in the autumn, an official with the Biden administration said on Thursday, after news that the consumer price index increased again by 0.6% last month. In the 12 months through May, the CPI accelerated 5.0%, hitting its biggest year-on-year increase since August 2008 and following a 4.2% rise in April.
  • The Federal Reserve operates with a sizable balance sheet that includes a large number of distinct assets and liabilities. The Federal Reserve’s balance sheet contains a great deal of information about the scale and scope of its operations. For decades, market participants have closely studied the evolution of the Federal Reserve’s balance sheet to understand more clearly important details concerning the implementation of monetary policy. Over recent years, the development and implementation of a number of new lending facilities to address the financial crisis have both increased complexity of the Federal Reserve’s balance sheet and has led to increased public interest in it.
  • Russia sold $5 billion of U.S. currency from its oil fund in May as part of a drive to reduce exposure to the greenback and vulnerability to Western sanctions. The National Wellbeing Fund converted $4 billion into yuan and $1 billion into euros, the Finance Ministry said in a statement. That leaves $35 billion of dollar holdings still to cut after the ministry said last week that it would eliminate all greenback exposure in the fund. The transfer is taking place within the central bank’s huge reserves so any market impact will be limited.
  • Cuba said on Thursday it would temporarily stop accepting cash bank deposits in dollars, blaming tighter U.S. sanctions that are restricting its ability to use greenbacks abroad, although it will still accept transfers. The move came shortly before the government was due to present its annual resolution to end the crippling, decades-old U.S. trade embargo on the Communist-run country at the United Nations General Assembly.
  • The yield on benchmark government bonds mostly fell yesterday. The yield on 2026 bond fell to 7.09%. Further, the yield on 2023 bond advanced to 5.03%, while that for the longer-dated 2030 issue fell to 8.65%.

In early trade on Friday 11 June 2021, the US dollar is trading lower against the South African rand at R13.5826, while the euro is trading marginally higher at R16.5572.  The British pound has declined against the South African rand to trade at R19.2586.

By the close of trade on Thursday, the euro declined against most of the major currencies.

  • The ECB held its key interest rates steady and indicated that it would continue to run its emergency bond purchases at a higher pace than at the beginning of the year, amid caution that any retreat could sharply raise borrowing costs and restrain a long-delayed recovery.
  • A recently-announced “three child” policy won’t prevent a long-term trend toward lower annual births in China, and the country will struggle to raise the retirement age by more than a couple of years by 2025, an influential Chinese economist said. “I don’t think we can drastically raise the birthrate,” Yao Yang, dean of the National School of Development at Peking University, said in an interview. The government’s move to allow families to have three children could lead to a short-term increase in births, but “we cannot expect the effect to continue for a long time,” he said.
  • Post-Brexit trade frictions between Britain and the European Union never completely went away but seem to have flared up again lately. Unsurprisingly, the dispute is around the complicated Northern Ireland protocol, meaning the matter could drag on for months and potentially not be resolved without escalating into something much bigger first. If the spat leads to a tit-for-tat tariff war, it could hurt Britain’s economic recovery from the pandemic. But that’s not the only thing the pound needs to worry about as the currency faces a double whammy from rising Covid infections across the United Kingdom.

In early trade on Friday, the euro has advanced against the US dollar to trade at $1.2196, while it has gained against the British pound to trade at GBP0.8626.